149. Telegram From the Embassy in Iran to the Department of State1
31. 1. Having conveyed indication to Shah re unfeasibility of pre-July 4 response to our conversation 29th (Embtel 28),2 FonMin Aram called me in evening 2nd. He had sheaf of notes substance of which emanated from Shah.
2. Main theme was that Shah wanted USG continue supply “sensitive” equipment like aircraft. As for non-sensitive material USG should show no concern if such items purchased from Soviets. Aram indicated there was possibility Shah had already approached Russians, i.e. in his talk with Semyon Skachkov, Chairman of Soviet State Committee for External Economic Relations, who was in Tehran this past week signing formal steel mill agreements. In any case, according to Shah via Aram, Americans should not react except cheerfully.
3. Expressing concern, I told Aram Shah should realize Americans are human also. There no question in my mind there will be American reaction if Shah initiates any kind of military procurement from Soviets. Americans will be particularly hurt because Americans have considered Shah tried and true ally and friend.
4. Aram contended USG has not been sufficiently forthcoming. “For seven months” (since passage of additional $200,000,000 credit authorization by Parliament) Shah has waited, Aram said, but only result is USG insists on treating Iran no better than ordinary commercial client.
5. Noting I was getting tired of this line, I said it is grossly unfair. Over years US MAP assistance has been tremendous. Aram agreed, saying Shah deeply appreciative. Despite what was presumably close military relationship, I said, Shah sprang $200,000,000 credit gambit in Parliament without any hint to us. We read about it in newspapers. I could assure Aram effect in Washington was not good. Nevertheless, at Shah’s prodding, USG had agreed provide additional credit.
6. It seems incredible to me, I said, that Shah fails appreciate extent of USG military assistance still under way. We had only two years ago agreed provide $200,000,000 credit for military purchases, of which $60,000,000 still available at 4 percent. Recently USG agreed to additional $200,000,000 at between 5 percent and 6 percent. Meanwhile, tens of millions of dollars worth of grant material (including five squadrons of F–5 [Page 267] aircraft) still undelivered, and tens of millions of dollars are programmed as grant component for our supposed joint program in years ahead. I said I could not comprehend Shah’s jeopardizing all these millions for a few dollars of ephemeral savings and a 2–1/2 percent interest rate.
7. Aram asked if I have explained all this to Shah. I said these points been conveyed to Shah time and again but he not in listening mood. Furthermore, when one gets explicit, Shah immediately gets offended, makes accusation we threatening him, and is propelled in opposite direction.
8. I went on to speculate that there is something more in all this than meets the eye. (Comment. My hunch, not indicated to Aram, is Shah wants to announce his abortive talks with consortium moguls next week that as he warned his Western friends Iran is shifting its trade pattern, including arms, to Eastern Bloc. This would turn defeat of consortium summitry exercise into cheap political victory.) Aram insisted Shah is honest and guileless friend of US with no ulterior motives.
9. Aram re-emphasized Shah wishes purchase only non-sensitive relatively unimportant military wares from Soviets. I alluded to incomprehensibility of Shah’s hastiness. I said I convinced adequate staff work not been done re purchases Shah proposing to make. In our talk 29th, I noted, he completely disinterested in PGM’s Hawk Missiles, etc. They best equipment available but apparently for political or other reasons, Shah eager to purchase elsewhere what may turn out to be junk. With Russians, Shah obviously doesn’t even know what he wants to purchase, but is “hell-bent” to purchase something probably for political reasons and also because he like other Iranians is mesmerized by 2–1/2 percent interest rate, totally disregarding other factors such as quality, value, etc. I added Shah’s military advisors tend to be sycophants who lack courage to question any whim Shah may have.
10. Another point, I said, is that by introducing Russians into Iranian military establishment Shah is inviting security problems for US. US military survey team some months ago checked Iranian security effectiveness and was able to give tentatively favorable report, thus permitting US to go forward with program for Iran’s acquisition of Hawks. Now Shah wants F–4 aircraft, one of most sophisticated pieces of equipment. It would not be surprising to me if USG would find it impossible to supply such equipment if Russians in any way involved in Iranian military establishment.
11. Another refrain we been hearing so frequently, I said, is that Iran is “independent” and will tolerate no “strings.” (Aram had earlier said Shah tends to feel USG treats him like “lackey.“) I noted how delighted U.S. is that Iran is standing on its own feet but added US is also independent. Just as Shah is free to purchase from wheresoever he wishes, including [Page 268] Soviets, U.S. is also free to determine when, how or where it will sell equipment, or even extend grant aid. Question is not one, therefore, of strings. I added that Shah had demonstrated his “independence” in steel mill deal and visits to East Bloc countries. There appeared no urgent need to do so in something as risky as military field.
12. Aram again urged that I have another go at Shah. Reiterating Shah’s quickness to take offense, I said he would probably as he did 29th try to back us into corner to state categorically whether F–5’s will or will not be forthcoming if he turns to Soviets. I assured Aram that while some sort of reaction is sure neither I, nor President Johnson himself, could in advance state precisely what nature of extent of American reaction will be. Such things as security factors, Congressional reaction, as well as Executive Branch determinations would all play a role.
13. Somewhat taken aback by this blunt talk, Aram said both he and I as diplomats would have to buckle down to confine damage if Shah turns to Russians. I said that was both our jobs. Nevertheless, even aside from direct repercussions on USG military supply program in Iran, by opening door to Soviets in military field Shah in every way stands to lose much more than he can gain. I noted in this connection troubles Pak President Ayub is having in putting lid back on Pandora’s box.
14. In closing I urged Aram to seek to curb precipitate action by Shah so as to permit productive US-Iranian dialogue to continue on matters of such vital consequence to this country. I said I ready talk again with Shah or Aram any time they felt it would be useful.
15. At his request ex-PriMin Alam and I discussed arms procurement situation morning 3rd. Covered most of same points covered with Aram but more in context of providing Alam with ammunition in his intimate discussions with Shah. Although considerably more worried than heretofore, Alam retains hope Shah can be dissuaded from involvement with Soviets in military matters.